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"I think that the prices will continue higher. I mean the
amount of money printing is unbelievable. I just think you have
to take that initial stand in terms of buying it.

I use the James Turk analogy: just keep dollar averaging. We
have gone up eleven years in a row, this year it looks like it
will be no exception; I would certainly think next year will be
no exception.

If we ever have QE3 announced, I think gold and silver will
just go absolutely bonkers here. And so I just think you have got
to step in there and own it; we’ve had these fears all the way
along.

You know, $400, and $500 and $700 and $800 dollar gold,
everyone was afraid it was a one-time thing. I don’t think it is
a one-time thing, I think it is a secular thing. It’s going to
carry on for quite a while here until we find some resolution of
these problems. And the resolution probably will be some form of
default where people just have to expunge debts that cannot be
repaid. So, you have got to be in some asset which will not be
affected by that."

So predicts Eric Sprott, founder of Sprott Asset Management and
famed investor. In this wide-ranging interview, he shares his
insights on the precious metals markets - specifically what
investors need to be aware of in terms of the way the markets are
currently managed (manipulated), the macro outlook for the
economy (grim) and the true value of gold and silver (very
underpriced; particularly silver).

Eric sees the current "extend and pretend" intervention by world
governments and central banks to prop of a fundamentally flawed
baking system, particularly the vast money printing efforts of
the past few years, as a ruse that is losing it's influence.
Once enough people ask "Why have your money in a bank earning
nothing? Why not have it in something that might at least
maintain it’s purchasing power?”, the capital flows into the
precious metals will dwarf current levels, sending bullion prices
much higher.

Those interested in hearing Eric's insights on:

why we're in a global secular bear market for most assets
classes

what the safest investment options are

how much precious metals exposure investors should have

the key factors that will drive PM prices much higher

the mindboggling supply shortage and manipulation within the
silver market

why there may eventually be two prices for bullion: one for
paper and (a much higher one) for physical & how high Eric
thinks prices could go

should click here to listen to Chris' interview with
Eric Sprott (runtime 38m:01s):

Or start reading the transcript below:

Chris Martenson: Welcome Eric, it's a real
pleasure to have you today.

Eric Sprott: Chris, good to be here and thank
you for all the work you are doing in apprising your investors of
what's really going on in the world.

Chris Martenson: Oh thank you. We’ve been at it
many years and unfortunately much of what I think both you and I
saw coming - though unfortunately not enough others along the way
- is really coming to pass. If I could, let’s start with your
views. You have been advocating and creating investment vehicles
for people to own gold and silver for a long time. How did you
get to that position and what are your views on owning gold and
silver at this point?

Eric Sprott: Sure. Well it all started, Chris,
with our studies back in 2001 where we were entering into a
secular bear market and wondering how you deal with that. And a
typical response would be to own gold and silver, which is what
we decided to do. I think the one thing that really tipped us
into it was an analysis of the physical supply and demand for
gold and some work by Frank Veneroso that suggested things would
have to change dramatically in the physical gold market because
the central banks were selling four to five hundred tons a year.
And as you know, here we are eleven years later and now they are
buying four hundred tons a year on balance, and this is in a
market where the mines supply only twenty-six hundred tons a
year. So that is a huge change that had to take place that Frank
identified back then. He also identified that the gold companies
would stop hedging. We’ve had the ETF’s come along. So we have
had a lot of dramatic changes in the physical balance between
supply and demand in gold. And that is really what took us there
in 2000; to get actively involved in that particular market.

Chris Martenson: And looking at it today, has
anything changed in that analysis? You mentioned a secular bear
market, are we still in one and also has anything changed in the
fundamental supply/demand equation that has actually tipped it
one way or the other, further or less, since the initial analysis
you looked at?

Eric Sprott: Sure. Well I do think we are still
in the secular bear market and basically what people describe
with the phrase “extend and pretend”. And we had the zero
interest rate policy, the housing boom, the lending boom, TARP
and TALF and all those things which try to delay what naturally
should happen. When I look at the headwinds for gold and silver,
I really believe that we have been aided and abetted by a lot of
these policies, particularly QE1 and QE2 and the various printing
mechanisms of the ECB and the Japanese government and almost all
governments in the world. So as much as I would not have
anticipated those types of developments happening, they have
happened and they provide an even stronger headwind for people
realizing that currencies are not going to survive and to
maintain your purchasing power you have to own precious metals.

Chris Martenson: You know, I too have been
surprised by how long all of this has stretched out. If you had
told me five years ago - Eric if you had said “Chris, the Federal
Government in the U.S. is going to be running a $1.6 trillion
dollar deficit and the Federal Reserve is going to monetizing 75%
of that and the bond markets will be relatively tame and the
dollar will still be roughly where it is at”; I would have said
you’re nuts. But here we are. And my view on this is that what we
are kicking the can down the road. We have bought some time, -
which I am thankful for personally - however the risks are now
increasing. And the risk that I have identified that concerns me
a lot is that, sooner or later, much is happening in Greece right
now where suddenly the world wakes up and says “Hey, wait a
minute. They can’t possibly pay that back. And at 22% interest
rates on 2-year paper, they really can’t pay that back.” So
suddenly the illusion is lifted. We have collectively
suddenly gone, “Greece is not solvent. Oh, that’s terrible.” And
now we are grappling with that. But that same dynamic can be
extended to, I think, any of the governments that you just
mentioned. It varies across Europe somewhat, but in Japan and the
U.S. there certainly are fundamental mismatches between current
productive economic output and the levels of indebtedness. We are
printing our way to that. Is there a way that you can see that
this could actually be turned around where it all sort of pencils
out? Is there a solution to this that does not have to pass
through a fiscal crisis and possibly a currency crisis?

Eric Sprott: Well Chris, it is very hard to
imagine that happening. And then I look at really what has
happened over the last eleven years since we hit the high in
that, we basically created a problem in the world of banking
business and I always think of banks as being levered 20 to 1.
And when your paper assets start to decline, of course it does
not take much of a decline to get rid of all the capital. And we
have seen that in so many instances whether it is Iceland or
Ireland or now the Greek banks. And all the moves that have
happened so far, really have been in response to the problems in
the banking system. That is why you have TARP and TALF and all
those things because the banks basically were losing deposits and
somebody had to come in and support them. That is what happened
in the UK, it happened in Iceland, it happened in Ireland, it’s
happening in Greece as is transpiring right now. And I think the
big fear is that you cannot let one banking system go down
without an impact on all the other banking systems. So
collectively everyone is trying to support the banking system and
I think people see through the ruse. And the natural
reaction is “Well, why have your money in a bank when you earn
nothing, why not have it in something that might at least
maintain it’s purchasing power?”

Note: listeners interested in the conclusions expressed
within this interview will also want to read Chris' recent report
onThe Screaming Fundamentals For
Owning Gold And Silver, which takes a deep dive into
the data behind the supply and demand imbalances in the bullion
markets.

Eric Sprott is Chief Executive
Officer, Chief Investment Officer and Senior Portfolio Manager at
Sprott Asset Management, LP. He manages Sprott Hedge Fund L.P.,
Sprott Hedge Fund L.P. II, Sprott Bull/Bear RSP Fund, Sprott
Offshore Funds, Sprott Canadian Equity Fund, Sprott Energy Fund
and Sprott Managed Accounts. He also is the Chairman of One Earth
Farms Corp and a Member of the Executive Committee of Central
Gold-Trust. Eric's predictions on the state of North
American financial markets have been captured throughout the last
several years in a monthly investment strategy article he authors
titled “Markets At A Glance”. Mr. Sprott holds a Chartered
Accountant designation.